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Why Is Marathon Oil (MRO) Up 1.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Marathon Oil (MRO - Free Report) . Shares have added about 1.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Marathon Oil due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Marathon Oil Corporation reported first-quarter 2023 adjusted net income per share of 67 cents, beating the Zacks Consensus Estimate of 57 cents. The outperformance reflects higher domestic oil and gas production.
However, the company’s bottom line fell from the year-ago adjusted profit of $1.02 due to weaker oil realizations in the United States and higher overall costs.
The company reported revenues of $1.7 billion, which came 4.4% above the consensus mark but fell 4.2% from the year-ago sales of $1.8 billion.
In good news for investors, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. As part of that, MRO executed $334 million in share repurchases in the first quarter.
Segmental Performance
This Texas-based energy explorer’s total net production (from U.S. and International units) in the quarter under review came in at 396,000 barrels of oil equivalent per day (BOE/d) compared to 345,000 BOE/d in the year-ago period.
U.S. E&P: This U.S. upstream unit reported an income of $425 million, down from $661 million in the year-ago period due to lower oil realizations and higher costs, partly offset by stronger production.
Marathon Oil’s average realized liquids prices (crude oil and condensate) of $74.69 per barrel were lower than the year-earlier level of $94.43. Additionally, natural gas liquids average price realizations decreased 35% to $24.27 a barrel. Finally, average realized natural gas prices plunged 38.4% year over year to $2.95 per thousand cubic feet.
Meanwhile, production costs were $5.82 per BOE, representing a 4.1% year-over-year rise.
Net production of 341,000 BOE/d was up 21.4% from first-quarter 2022. Total U.S. output comprised approximately 52% oil, or 176,000 barrels per day (bpd).
Significantly higher year-over-year production from Eagle Ford favorably affected the company’s quarterly performance, which was partly offset by lower volumes from the Bakken area. The Eagle Ford region recorded an average production of 144,000 BOE/d, surging 80% from the level in first-quarter 2022, while output from Bakken was 94,000 BOE/d compared with 118,000 BOE/d in the year-ago quarter. Meanwhile, Oklahoma output came in at 54,000 BOE/d, up from the year-ago level of 52,000 BOE/d.
International E&P: The segment, which explores and produces oil and gas in Equatorial Guinea, reported earnings of $89 million compared with $115 million in the year-ago period due to lower output.
Marathon reported production available for sale of 55,000 BOE/d, down from 64,000 Boe/d in first-quarter 2022.
Marathon’s average realized liquids prices (crude oil and condensate) of $58.57 per barrel reflected a 1.8% deterioration from the year-earlier quarter. Natural gas and natural gas liquids’ average price realizations came in at 24 cents per thousand cubic feet and $1 a barrel, respectively, the same as the corresponding period of 2022.
Financial Position
Total costs in the quarter were $1.1 billion, $127 million higher than the prior-year period. Marathon Oil reported an adjusted operating cash flow of $942 million for the first quarter, down 26.4% from a year ago.
As of Mar 31, 2023, it had cash and cash equivalents worth $178 million and long-term debt of 5.7 billion. The debt-to-capitalization ratio of the company was 33.4.
Marathon Oil spent $601 million in capital and exploratory expenditures during the quarter and raked in $309 million in adjusted free cash flow.
2023 Guidance
Marathon has maintained its budgeted capital spending between $1.9 billion and $2 billion this year. Meanwhile, MRO continues to prioritize shareholder returns over production growth. The company is targeting production in the range of 385,000 BOE/d to 405,000 BOE/d, up more than 15% (at the midpoint) from last year. Further, Marathon expects oil volumes in the band of 185,000-195,000 barrels per day. Assuming $80 WTI, Marathon Oil expects to return a minimum of 40% of its cash flow from operations.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -10.42% due to these changes.
VGM Scores
Currently, Marathon Oil has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Marathon Oil has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Marathon Oil is part of the Zacks Oil and Gas - Integrated - United States industry. Over the past month, Antero Midstream Corporation (AM - Free Report) , a stock from the same industry, has gained 0.3%. The company reported its results for the quarter ended March 2023 more than a month ago.
Antero Midstream Corporation reported revenues of $259.48 million in the last reported quarter, representing a year-over-year change of +18.8%. EPS of $0.21 for the same period compares with $0.19 a year ago.
For the current quarter, Antero Midstream Corporation is expected to post earnings of $0.20 per share, indicating no change from the year-ago quarter. The Zacks Consensus Estimate has changed +3% over the last 30 days.
Antero Midstream Corporation has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Why Is Marathon Oil (MRO) Up 1.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Marathon Oil (MRO - Free Report) . Shares have added about 1.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Marathon Oil due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Marathon Oil Reports Better-Than-Expected Q1 Earnings
Marathon Oil Corporation reported first-quarter 2023 adjusted net income per share of 67 cents, beating the Zacks Consensus Estimate of 57 cents. The outperformance reflects higher domestic oil and gas production.
However, the company’s bottom line fell from the year-ago adjusted profit of $1.02 due to weaker oil realizations in the United States and higher overall costs.
The company reported revenues of $1.7 billion, which came 4.4% above the consensus mark but fell 4.2% from the year-ago sales of $1.8 billion.
In good news for investors, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. As part of that, MRO executed $334 million in share repurchases in the first quarter.
Segmental Performance
This Texas-based energy explorer’s total net production (from U.S. and International units) in the quarter under review came in at 396,000 barrels of oil equivalent per day (BOE/d) compared to 345,000 BOE/d in the year-ago period.
U.S. E&P: This U.S. upstream unit reported an income of $425 million, down from $661 million in the year-ago period due to lower oil realizations and higher costs, partly offset by stronger production.
Marathon Oil’s average realized liquids prices (crude oil and condensate) of $74.69 per barrel were lower than the year-earlier level of $94.43. Additionally, natural gas liquids average price realizations decreased 35% to $24.27 a barrel. Finally, average realized natural gas prices plunged 38.4% year over year to $2.95 per thousand cubic feet.
Meanwhile, production costs were $5.82 per BOE, representing a 4.1% year-over-year rise.
Net production of 341,000 BOE/d was up 21.4% from first-quarter 2022. Total U.S. output comprised approximately 52% oil, or 176,000 barrels per day (bpd).
Significantly higher year-over-year production from Eagle Ford favorably affected the company’s quarterly performance, which was partly offset by lower volumes from the Bakken area. The Eagle Ford region recorded an average production of 144,000 BOE/d, surging 80% from the level in first-quarter 2022, while output from Bakken was 94,000 BOE/d compared with 118,000 BOE/d in the year-ago quarter. Meanwhile, Oklahoma output came in at 54,000 BOE/d, up from the year-ago level of 52,000 BOE/d.
International E&P: The segment, which explores and produces oil and gas in Equatorial Guinea, reported earnings of $89 million compared with $115 million in the year-ago period due to lower output.
Marathon reported production available for sale of 55,000 BOE/d, down from 64,000 Boe/d in first-quarter 2022.
Marathon’s average realized liquids prices (crude oil and condensate) of $58.57 per barrel reflected a 1.8% deterioration from the year-earlier quarter. Natural gas and natural gas liquids’ average price realizations came in at 24 cents per thousand cubic feet and $1 a barrel, respectively, the same as the corresponding period of 2022.
Financial Position
Total costs in the quarter were $1.1 billion, $127 million higher than the prior-year period. Marathon Oil reported an adjusted operating cash flow of $942 million for the first quarter, down 26.4% from a year ago.
As of Mar 31, 2023, it had cash and cash equivalents worth $178 million and long-term debt of 5.7 billion. The debt-to-capitalization ratio of the company was 33.4.
Marathon Oil spent $601 million in capital and exploratory expenditures during the quarter and raked in $309 million in adjusted free cash flow.
2023 Guidance
Marathon has maintained its budgeted capital spending between $1.9 billion and $2 billion this year. Meanwhile, MRO continues to prioritize shareholder returns over production growth. The company is targeting production in the range of 385,000 BOE/d to 405,000 BOE/d, up more than 15% (at the midpoint) from last year. Further, Marathon expects oil volumes in the band of 185,000-195,000 barrels per day. Assuming $80 WTI, Marathon Oil expects to return a minimum of 40% of its cash flow from operations.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -10.42% due to these changes.
VGM Scores
Currently, Marathon Oil has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Marathon Oil has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Marathon Oil is part of the Zacks Oil and Gas - Integrated - United States industry. Over the past month, Antero Midstream Corporation (AM - Free Report) , a stock from the same industry, has gained 0.3%. The company reported its results for the quarter ended March 2023 more than a month ago.
Antero Midstream Corporation reported revenues of $259.48 million in the last reported quarter, representing a year-over-year change of +18.8%. EPS of $0.21 for the same period compares with $0.19 a year ago.
For the current quarter, Antero Midstream Corporation is expected to post earnings of $0.20 per share, indicating no change from the year-ago quarter. The Zacks Consensus Estimate has changed +3% over the last 30 days.
Antero Midstream Corporation has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.